ANNAPOLIS -- Bethlehem Steel Corp., with the help of a $2.8 million loan from the state and Baltimore County, will move its idle dry dock from Baltimore's Inner Harbor to the Sparrows Point plant to begin repairing ships, a company official said last week.

Dave Klinges, president of Bethlehem Steel's marine construction division, said the dry dock will bring back the company's repair business, which has been stifled because of lack of space.

The dry dock is expected to generate 425 new jobs to the shipyard, which currently employs 1,340 people, Klinges said.

Rep. Helen Bentley (R-Md.), who was instrumental in getting the state and county loans together for the $5 million project, said: "It's a great day indeed for the Port of Baltimore, the Sparrows Point area and the state of Maryland."

Baltimore County Executive Dennis Rasmussen said the county is lending the Maryland Economic Development Corp. $1.3 million to buy the dry dock from the steel company. The state is investing another $1.5 million to buy the dock.

"We're greatly encouraged with what we see has an unlimited economic potential for the county," Rasmussen said. "We want to do what we can to maintain the viability of the county's largest employer."

Under the agreement, Bethlehem Steel will invest $2.2 million in the project and pay back the loans within nine years, officials said. The state, under the Maryland Economic Development Corp., will purchase the dry dock from the steel company for $2.8 million and lease it back to Bethlehem Steel for nine years with renewal options of five years each up to 19 years.

Gov. William Donald Schaefer, who used a similar leaseback arrangement to retain 600 jobs at the Kelly-Springfield Tire Co. plant in Western Maryland, said his administration will continue to invest in private industry whenever it is needed to keep jobs in the state, so long as the ventures are lucrative.

"I don't think we can afford to lose all our manufacturing and jobs to foreign shores," Schaefer said, adding that he would like the legislature to approve a $15 million discretionary fund next year for the state to use on loans and grants to companies without needing prior legislative approval.

The dry dock, 882 feet long and 140 feet wide, is moored off Key Highway near Federal Hill, the site of the former shipyard. It has a lifting capacity to accommodate ships up to 44,000 tons. The dry dock has been idle since 198